Building a Cognitive Enterprise: How to accelerate your digital transformation for the new normal

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Author: Doug Robinson, Managing Partner, Global Business Services, IBM Australia and New Zealand 

We are at a tipping point in history where the impact of technology is so significant it can completely transform the way business is done. The convergence of technologies such as artificial intelligence (AI), automation, Internet of Things (IoT), blockchain and 5G has the power to change business models, reinvent processes, and reimagine the way we all work. IBM calls this the emergence of the Cognitive Enterprise^TM.

Since the start of the COVID-19 pandemic, the rate of change has shifted into warp drive. Office towers emptied, with many people still working remotely. Supply chains were broken, and many businesses are still scrambling to piece them back together. Industries changed overnight, with some enjoying sudden booms and others resigned to months or even years of suppressed demand.

Accelerating change

While most organisations had already embarked on digital transformations, the pandemic has made the need for change much more urgent, with organisations turning to digital technologies to either help solve pressing issues or scale up for growth.

Before the pandemic, the organisations seeking major transformations were typically either those struggling or high performers ahead of the curve. Now, we are seeing the business performance bell curve turned upside down, with an even greater discrepancy between the leaders and laggards.

This division is reflected in IDC’s Global COVID-19 Impact on IT Spending Survey, June 16th, which showed 35 per cent of Australian organisations and 29 per cent of New Zealand firms were in a “return to growth” phase in the COVID-19 response, the survey found. But one-third of the organisations in both countries are still in a recessionary stage, where the focus was on building business resiliency and dealing with the uncertainty of how and when the economies will fully reopen.

The biggest challenge when undertaking digital transformation? What to do with legacy systems, skills and operational processes that reinforce old behaviours. Organisations need a fresh approach to build new platforms and skills while maintaining and modernising their legacy environments.

Driving change from the inside out

For much of the past decade, organisations have been striving for ‘outside-in’ digital transformations. They have been connecting themselves more deeply to customers and external stakeholders, using the power of the internet for pervasive connectivity and driving these digital capabilities deeper into their businesses. Today, leading enterprises are building on these capabilities by driving ‘inside-out’ transformations. They are unlocking the power of their data through new technologies that offer exponential gains, such as AI, blockchain, automation, IoT, 5G and edge computing.

Leading enterprises are combining these two forces in a new wave of change and structuring themselves around reimagined business platforms.

The building blocks of the Cognitive Enterprise

Having worked with many industry leaders, IBM has identified three key components that underpin this new business model:

• Market-making business platforms – the clear North Star for the investment priorities and change initiatives required to shift to the future, these focused, critical and impactful platforms reinforce competitive positioning within an industry, shape a new role in an industry context, or open up cross-industry market opportunities.
• Intelligent workflows – the extended end-to-end or front-to-back processes that, through the application of technology at scale, define the customer experience and economic outcomes at the heart of the new business platforms, and clearly differentiate the company or industry.
• Enterprise experience and humanity – extending customer experience to the employees that serve the customer, the enterprise itself, and the entire ecosystem to provide a seamless environment of value and purpose using human-centred design.

Within these components are action areas – nine in total – that we see as critical to creating a framework for success.

How to start the journey

But how do you start the journey to develop these capabilities and create the platforms, workflows and enterprise experiences needed to become a Cognitive Enterprise?

We have created a new approach to digital transformation called IBM Garage. The Garage is designed to help organisations move at the speed of a start-up and become Cognitive Enterprises.

The Garage blends business strategy, design and technology into a single end-to-end journey – which can all be done virtually. It starts with creating an environment where cross-functional teams can come together with strategic partners to co-create new business platforms. It draws in the full breadth of exponential technologies and solution components. And it applies modern business methodologies, such as design thinking and agile, to accelerate the process of turning ideas into prototypes and then operational innovations.

To learn more about building a Cognitive Enterprise, see our full research report, and to read more about accelerating transformation, visit IBM Garage.